Emerging Markets: FX set for weekly gains as dollar slides on U.S. bank woes

Rainforest Resources

05/05/2023 09:40

* 
      FX up 0.1%, stocks add 0.4%
    

        * 
      China's services activity grows but at slower pace -
Caixin PMI
    

        * 
      Hungary's March industrial output shrinks, retail sales
fall
    

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      Russian rouble hits more than one-month high against
dollar
    

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      Ecuador frees cash for Galapagos with $1.6 bln bond
repurchase
    

        * 
      IMF: Pakistan bailout review to conclude once financing in
place
    

  
    By Bansari Mayur Kamdar
       May 5 (Reuters) - Emerging market currencies extended
gains for a third straight day on Friday, on track to end the
week higher supported by a weakening dollar, while the Hungarian
forint eased on fears of further contraction in the Central
European economy.     
    Weighing on the U.S. dollar index  =USD  and global risk
sentiment, shares of U.S. regional banks continued to sink on
fears of a crisis in the financial sector.
    The MSCI's index for emerging market currencies
 .MIEM00000CUS  rose 0.1% by 0817 GMT.
    Hungary's forint  EURHUF=  slipped 0.1% against the euro on
fears of a deeper recession after data showed industrial output
fell much more than expected in March and retail sales plunged.
    The Russian rouble  RUBUTSTN=MCX  surged to a more than
one-month high beyond 77 against the dollar, ahead of a long
weekend in Russia and as oil prices staged a partial recovery.
    The South African rand  ZAR=  eased 0.3%, while the Turkish
lira  TRYTOM=D3  inched down in the run up to elections on May
14.
    "Given relatively stable spot USD/TRY, there is scope for
greater two-sided volatility into and post elections, although
FX forward rates have already been moving meaningfully weaker,"
strategists at Goldman Sachs said in a note.
    Emerging market hard currency sovereign bond issuance fell
34% to $9.3 billion in April, after a rebound in March,
according to Tellimer Research calculations using data from Bond
Radar. 
    "The relatively subdued primary market activity was
reflected in the lacklustre performance of EM sovereign bonds,"
said Stuart Culverhouse, head of fixed income research at
Tellimer, in a note.
    MSCI's emerging market stocks index  .MSCIEF  advanced 0.4%,
and was set to end the week higher.
    Hong Kong stocks  .HSI  rose 0.4% after data showed China's
services activity grew for a fourth consecutive month in April,
while mainland China shares closed lower, dragged down by
artificial intelligence-related companies.
    Elsewhere in emerging markets, Colombia's Congress on
Thursday approved a $247.4 billion four-year development plan,
paving the way for the government of President Gustavo Petro to
implement social and economic reforms.
    The International Monetary Fund (IMF) is working with
Pakistani authorities to conclude a ninth review of a bailout
programme, its mission chief said, funding critical for the
cash-strapped country to avert an economic collapse.
    Credit Suisse repurchased Ecuadorean sovereign notes worth
$1.6 billion in face value, the country's bankers said on
Thursday, freeing cash for conservation of the unique Galapagos
Islands in the biggest debt-for-nature swap ever struck.
    
    
        

 (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by
Conor Humphries)
 ((BansariMayur.Kamdar@thomsonreuters.com;  Twitter:
@BansariKamdar;))
 
((    
For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX
    
    For TOP NEWS across emerging markets  urn:newsml:reuters.com:*:nTOPEMRG
    For CENTRAL EUROPE market report, see  CEE/ 
    For TURKISH market report, see  .IS 
    For RUSSIAN market report, see  RU/RUB ))